Portsmouth plea for survival

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The Independent Football

Portsmouth could today become the first Premier League side to go into liquidation after talks with HM Revenue and Customs to stave off a winding-up petition dramatically broke down last night.

The club's lawyers had been attempting to broker an agreement with representatives from HMRC that would have bought Portsmouth valuable time. However, shortly before kick off at last night's 1-1 draw with Sunderland – where the manager was sent-off at half-time – the lawyers admitted defeat in their negotiations. The club owe the authorities £7.5m in unpaid tax and VAT and face a winding-up petition at the High Court today, which has already been postponed once.

Portsmouth, who have debts of £60m, had offered to pay HMRC £1.8m up front followed by instalments to pay off the rest of the £7.5m bill. However, now that attempt has failed.

Portsmouth's legal team are due in court at 10am and will first ask for another adjournment for a further 28 days. They are disputing the amount of VAT that HMRC say they owe, and are asking for more time to compile their case. If their appeal for an adjournment is rejected, then the hearing will move on to the winding-up petition that has been initiated by HMRC.

The High Court has the power to order Portsmouth into liquidation immediately. The club also has the option of voluntarily going into administration before that happens. The court could also order the club into administration, which would incur an immediate nine-point penalty that would all but ensure relegation to the Championship. No Premier League club has ever been liquidated or gone into administration.

Avram Grant, the Portsmouth manager, last night made an emotional plea to the court to take into account the passion of the club's supporters. "The court needs to think about this. It is not a clear case," he said. "This club belongs to 250,000 people. Each of them gives their heart to the team. This is not a normal case. If people have made a mistake, you need to punish the people who made the mistake, not the players, the supporters, the town.

"It is not an easy decision. It is more than just about who owes this money or that money. Football is not one plus one equals two. It is a passionate game."

Portsmouth are joined on today's list to appear at the Royal Courts of Justice in The Strand, London, by Cardiff City, who owe £2.7m in tax arrears, Southend United, who dispute a tax bill of £205,000, and Hinckley United, the Blue Square North club, who claim they have settled their bill of £191,000.

Last night's collapse of the negotiations is the latest blow for 122-year-old Portsmouth, who won the FA Cup in 2008. Since that memorable day at Wembley, they have sold £94m of playing talent in a vain attempt to stay out of bankruptcy. The troubles began in late 2008 when Portsmouth's main creditor, Standard Bank, demanded that outstanding loans of £30m be made in full. That triggered the withdrawal of Sacha Gaydamak from the club, which was then sold to United Arab Emirates investor Sulaiman Al-Fahim. His ownership lasted less than six weeks as he failed to refinance the club and sold it on to Saudi businessman Ali Al-Faraj.

Al-Faraj's takeover was portrayed as rescuing the club. But he has struggled since October to find investors. Last week Balram Chainrai, the Hong Kong-based businessman, became the fourth owner in seven months when he took over the club as a short-term measure to ensure he does not lose the £17m loan he made to the club in October. "Without his financial input, we might not be here today," Portsmouth chief executive Peter Storrie said yesterday. They may not be here much longer.